Published 16 October 2001

The future viability of Australian domestic air services depends on the government's developing a cooperative operating environment with sponsorship and limited scope for competition, according to Neil Leiper from Southern Cross University's School of Tourism and Hospitality Management.

Professor Leiper, who lectures in strategic management, said "Australia's small population, the geography of major air routes and the economics of airlines means markets can not sustain a highly competitive airline industry like the one introduced here in the 1990s and seen in the USA over past decades".

He stressed that the services were too important - for the community, business, national sports, touring performing art groups and national and regional tourism interests - to risk the impact of what he called "the invisible hands of market forces".

Professor Leiper's comments were contained in a research study titled 'Why Ansett Airlines Failed and How to Prevent It Happening Again' where he argued that the underlying cause of the Ansett demise was excessive competitive conditions on domestic routes from the late 1990s to 2001.

The study, which looked at Ansett's history, the consequences of the airline's demise, attributions of blame, the call for sector competition and the issue of ownership, was supported by the national Cooperative Research Centre for Sustainable Tourism. It will be published soon in the research journal Current Issues in Tourism.

"While poor performance of directors and managers was a factor triggering the failure, the principal underlying cause was the government's policy of imposing intensely competitive conditions on Australia's domestic trunk route markets," Professor Leiper noted.

He has called for local ownership of crucial domestic airlines: "They are too important to be placed at risk under foreign ownership. Just as Qantas must, by law, be majority owned in Australia, so any airline that acquires a significant share of the domestic market should be subject to the same law."